FGVH’s turnaround possible in 3 years

By ALIFAH ZAINUDDIN / Pic By TMR

The new leadership at Felda Global Ventures Holdings Bhd’s (FGVH) board and the return of its CEO after a four-month leave absence could see the planter’s fortune turning around in three years.

The government recently appointed Datuk Wira Azhar Abdul Hamid as the chairman, while Datuk Zakaria Arshad will return to the FGVH’s fold next week.

Both developments have been well-received by various stakeholders, especially settlers who see the leaders as politically-neutral.

Federation of Public Listed Companies Bhd president Tan Sri Megat Najmuddin Megat Khas said Azhar and Zakaria are the “right people” to steer FGVH out from its doldrum.

“We should give them about three years. If they make a turnaround by then, that would be good. The company has a number of things to do, including unloading non-performing assets and to concentrate on their core plantation business.

“With both of them at the top, I think there will be less drama. That way the company can focus on making money and perform better in the years to come,” he told The Malaysian Reserve.

The plantation giant’s financial performance has been going down south since it became a public company in 2012. According to Bloomberg, its net income had fallen from RM982 million in 2013 to RM31.47 million in 2016 — a 97% drop in just three years.

Its financial performance was dragged by the crude palm oil price decline. Share price of the palm oil company slumped from RM4.55 during its initial public offering (IPO) to a record low RM1.19 in August 2015.

Besides market forces, the internal boardroom tussles had added a spanner to the planter’s operation.

Zakaria and three other executives were forced to go on leave in June pending an internal investigation on a transaction that was deemed improper. All four have been given the nod to resume their duties.

Veteran politician Tan Sri Mohd Isa Abdul Samad and Datuk Noor Ehsanuddin Mohd Harun Narrashid had also resigned as chairman and board member respectively.

MIDF Amanah Investment Bank Bhd head of research Mohd Redza Abdul Rahman said Azhar and Zakaria’s combined experiences would provide the ideal leadership to take the company forward.

“The leadership would probably look to increase the efficiency of FGVH operations to bring it at par or better than peer plantation companies. This means improving the tree age profile.

“They also have to work on getting their staff on board to control costs and improve profitability,” he said.

Mohd Redza said if FGVH can work on its financial performance, the investing community will likely ascribe to a higher share price.

“It would be difficult to say when its share price will touch the IPO price, but time and the company’s financials will tell if this will become a reality,” he said.